Fiscal Policy Incentives

Comparison

Comparison
Table INDIA BANGLADESH SRI LANKA PAKISTAN

100% Income Tax BEZA Zero % income taxes on

exemption on export for ZD: 10 Years –100%, IT, Agro Farming (w.e.f.
the first 5 years, 50% for 11th year –70%, 01 April 2019) & Export
next 5 years and 50% of 12th year – 30% of Services. 100% Exempt for 10
the ploughed back Thrust industries years
export profit for next 5 ZE: First 3 years – (electronics, ceramics,
INCOME TAX
years 100%, 4th year – 80%, glassware, mineral
EXEMPTION (Sunset Clause for Units based, rubber based
5th year onwards 10%
has become effective reduction per year. and engineering based
from 01.04.2020) manufactured exports)
exempt up to 20 years;

100% deduction, for 100% deduction for

20% tax on offshore 100% Exempt for 10
the first 5 years, 50% the first 5 years, 50%
transactions years
PROFIT TAX RATE deduction next 5 deduction next 5
years years

Exemption on goods
from Domestic Tariff Exem pt Exem pt Exempt for 10 years
Area (DTA)
EXCISE DUTIES

Full repatriation of Full repatriation of Full repatriation of Full repatriation of

invested capital, invested capital, invested capital, invested capital,
profits, and dividends profits, and dividends profits, and dividends profits, and dividends
REMITTANCES

Full repatriation of Exempt for nonresident

invested capital shareholders for
DIVIDENED profits, and dividends 100% Exempt lifetime: 15% tax during Exempt for 10 years
DISTRIBUTION Exempt (withdrawn holiday for resident
TAX (DDT) w.e.f. 1.6.2011) shareholders

Exempt (Capital
Exem pt Exem pt Exempt for 10 years
Goods)
SALES TAX

On Raw Materials'
Yes -- Exempt for 10 years
import
DUTY REBATE
SCHEMES

15% (exempt for 10

14% (non-resident) Exempt for 10 years
ROYALTIES 10% years)
(WITHHOLDIN G
TAX)

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Fiscal Policy Incentives

Comparison
Table INDIA BANGLADESH SRI LANKA PAKISTAN

Exempt for 10 years

Import: Exemptions Exempt for 10 years
for Capital Goods Import: Exempt for 10
Up to 10 years Up to 10 years
CUSTOMS DUTY Only during project years on Capital
EXEMPTION implementation Goods
period.

TAX HOLIDAYS 10 years 10 years 10 years 10 years

FOR SEZ
DEVELOPERS

Exempt for
developers, for units Exempt for ZDsand
Exem pt Exem pt
(withdrawn w.e.f. ZEs for 10 years
M I NI M UM 1.4.2012)

ALTERNATE TAX

Exemption on
Exempt on asset Exempt for 10 years Exempt for 10 years
transfers of shares to
transfers from urban (asset transfers)
non residents
area to SEZ
CAPITAL GAINS
TAX

5-10 years exemption BEZA supports in all 5-8 years’ exemption

STZA supports rural
for undesirable regions including for undesirable
STZs Development
location development backward regions location development

BACKWARD ZONE
DEVELOPMENT

Land rates were set

below cost recovery Land lease at govt.
levels. It was leased to Land donations were rates much lower
--
Nokia at Rs.1 per yr made by the Govt. than market value
for 98 yrs and Rs.2 for
SUBSIDIZED LAND the 99th yr

Sources:
1.SPECIAL ECONOMIC ZONES IN SOUTH ASIA , A Comparative Analysis of Bangladesh, Sri Lanka, and India, Harvard University.
(https://www.innovations.harvard.edu/sites/default/files/124771.pdf )
2. http://sezindia.nic.in/cms/facilities-and-incentives.php
3. http://www.beza.gov.bd/investing-in-zones/incentive-package/
4. https://investsrilanka.com/investment-incentives/
5. http://www.centennial-group.com/special-economic-zones-and-prospects-for-sri-lanka/
6. https://wirc-icai.org/images/material/Income-Tax-issues-SEZ-IFSC-AJ.pdf
7. https://cleartax.in/s/capital-gain-exemption
8. http://www.ilo.org/public/french/dialogue/download/epzsrilanka.pdf
9. https://www.econstor.eu/bitstream/10419/176177/1/icrier -wp-155.pdf
10. https://assets.kpmg/content/dam/kpmg/xx/pdf/2018/09/sri -lanka-2018.pdf

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